According to IAB’s 2025 Outlook Report, commerce media remains the fastest-growing digital advertising channel, but its growth rate is slowing significantly. Commerce ad spend is projected to increase +25.1% in 2024 (YoY from 2023) and +15.6% in 2025 (YoY from 2024). While this is still nearly twice the rate of overall ad spend growth, it also marks the steepest YoY decline in commerce media’s expansion—down 10 percentage points.
This slowdown signals a critical shift: while advertisers continue to see value in commerce media proximity to commerce, closed-loop measurement, and integration with broader retailer buys, challenges such as fragmentation, lack of standardization, and rising costs are leading to more cautious investments. As retail media matures, its future depends on the industry’s ability to deliver consistent performance, measurement clarity, and operational efficiency.
Structural and Economic Headwinds
In recent times, several economic challenges have emerged, influencing both consumer behavior and retail operations: inflationary pressures, escalating (and shifting) tariffs, and record consumer debt. These economic factors lead to tighter consumer budgets, prompting retailers to adjust strategies to maintain sales and profitability. Re-adjustment can look like tightening inventory buys, focusing on top SKUs, and prioritizing capital for quick commerce investments over commerce media improvements.
Additionally, the retail media ecosystem remains fragmented, making it challenging for brands to achieve standardized measurement and interoperability across networks. While leading commerce media networks are adopting IAB measurement standards, adoption is uneven, slowing progress toward the transparency and accountability that brands demand.
Competing for Ad Dollars: The Commerce Media Power Divide
Despite the proliferation of Commerce Media, sometimes called Retail Media Networks (RMN), the majority of ad spend is concentrated among a few players. According to eMarketer data from Q4’24, Amazon and Walmart alone command 84% of commerce media investment, leaving only 15% to be distributed across an ever-growing number of smaller retail networks.
For mid-sized and niche retail media networks, differentiation is becoming critical. Some are focusing on unique audience insights, category-specific offerings, or premium media placements, while others are struggling to hit their revenue forecasts. The long tail of networks will likely see consolidation or strategic partnerships as brands and agencies streamline their investments into fewer, higher-performing platforms.
Retailers vs. Brands: Diverging Views on Commerce Media Value
Sentiment around commerce media is highly dependent on the audience. Retail and shopper marketing teams often view commerce media as more effective than other digital media, while traditional brand marketers and agencies remain skeptical. According to the July 2024 ANA CMO survey, most marketing leaders still see commerce networks as a “have to invest” rather than a “want to invest”—suggesting lingering doubts about their effectiveness versus necessity.
Additionally, organizational silos remain a challenge. Many brands are restructuring internal teams to better integrate commerce and marketing, but retailers themselves remain siloed—impacting RMN efficiency and execution. Moves like Walmart merging commerce and media functions could set a precedent for broader industry shifts.
AI, Self-Service, and the Future of Commerce Media
Beyond economic and structural factors, technology is reshaping the commerce media landscape. The rise of agentic AI—where consumers interact with intelligent systems for shopping decisions—could disrupt traditional search-driven advertising models. For example, Perplexity AI’s integration of shoppable links hints at a future where AI-powered commerce recommendations compete directly with commerce media placements.
Simultaneously, the shift from managed service to self-serve platforms is lowering operational costs for retailers but increasing complexity for brands, especially mid-sized advertisers who struggle with high minimum investment thresholds. The next phase of commerce evolution will likely involve streamlined, more accessible self-service tools that cater to a broader set of advertisers.
The Path Forward: What’s Next for Commerce Media?
While growth is slowing, commerce networks are far from declining. Instead, they are entering a phase of necessary evolution, where success will hinge on:
- Stronger performance validation – Brands need cross-retailer, standardized and transparent measurement to justify continued investment.
- Greater accessibility for mid-market advertisers – lowering barriers to entry to unlock new growth.
- Smarter cross-channel integrations – they must connect with CTV, social, and search for a seamless consumer journey.
- AI-driven shopping experiences – The retail AI revolution will challenge traditional commerce media models, forcing adaptation.
Retail media is maturing. The next chapter of Commerce Media will be defined not by promise but by performance, standardization, interoperability and strategic alignment with the broader advertising ecosystem.
